Time to Vacate Mall-REIT Stocks

Investors seem properly cautious on retail chains but overly bullish on their landlords.

By

Jack Hough

December 27, 2012

By

Jack Hough

December 27, 2012

Retail stocks skidded on the day after Christmas following reports of tepid holiday sales. However, a look at valuations suggests that mall REITs -- real estate investment trusts that rent space to retailers and pass their profits on to shareholders as dividends -- are better candidates for profit-taking.

For example, shares of Gap (GPS) lost 3% Wednesday and trade now at 13 times projected profits for its current fiscal year, versus a 10-year average of 15 times, according to FactSet. By several measures, the clothing...